Housing crisis in Europe: Italy ranks last in new dwellings completed

Brussels – Europe’s new housing sector is experiencing significant challenges, as highlighted by a recent article published by Eunews, authored by Francesco Ettore Tito. The report draws on estimates from the Euroconstruct network, which includes contributions from the ifo Institute in Munich, detailing the current state of the housing market and its implications for sustainable housing development across the continent.

According to the estimates, approximately 1.46 million new dwellings are expected to be completed in 2025, marking a decline from 1.55 million in 2024. This trend is indicative of ongoing difficulties in the construction sector, with forecasts for 2026 suggesting only a slight recovery to about 1.51 million units, still significantly below pre-crisis levels. The report attributes this slowdown to a combination of factors such as rising interest rates, diminishing household purchasing power, and soaring construction costs.

The challenges facing the housing market are further complicated by legislative and fiscal changes. Reductions in incentives for new construction and the introduction of taxes have dampened investment in housing. Industry expert Ludwig Dorffmeister from the ifo Institute notes that these adverse conditions have adversely affected the start and completion of housing projects across various European countries.

Germany is particularly affected by these trends, with new housing completions projected at only 205,000 in 2025, a significant 19 percent decrease from the previous year. The outlook for 2026 appears even bleaker, with only 185,000 units expected to be completed. Although there are some signs of improvement in real wages and property prices, the overall market conditions remain challenging. Efforts like the “construction turbo” initiative aimed at accelerating housing production have so far yielded limited results.

At the European level, the situation is mixed. While some countries, such as the Czech Republic, Sweden, and Hungary, are witnessing positive growth in housing completions—reporting increases of 27 percent, 21 percent, and 20 percent respectively—ten European nations are still experiencing declines. Notably, France has seen a 14 percent drop, while the United Kingdom is facing a contraction of 10 percent.

The report sheds light on significant disparities in the number of completed dwellings per inhabitant across Europe. Only Ireland, Poland, and Switzerland are expected to surpass five units per 1,000 inhabitants in 2025, with Ireland notably planning more than 38,000 new dwellings, equating to about seven units per 1,000 residents. In contrast, Germany, the United Kingdom, and Spain hover just above two units, while Italy ranks the lowest at a mere 1.6 new dwellings per 1,000 inhabitants.

Looking ahead to 2026-2027, the outlook remains weak. Euroconstruct forecasts minimal growth, supported by some public investments and infrastructure initiatives. However, these measures may not be sufficient to bridge the gap created in the preceding two years. Without decisive actions to address costs, building regulations, and access to credit, the European residential market risks entering a prolonged phase of stagnation, posing additional challenges for sustainable housing development across the continent.